A Quick Reminder That The US Economy Is The Envy Of The World

Morgan Stanley Chief Economist Vincent Reinhart has raised his
GDP forecast for the US, and it's a quick reminder that the US is
the envy of the world, still.

The US economy is showing sufficiently surprising vigor to induce
us to nudge up our forecast for real GDP growth this year and
next. This puts us out of sync with some of our colleagues
covering other major economies, who are marking down near-term
numbers, but data are data and wealth creation is a powerful
force of forward momentum. The last time we wrote down a
forecast, in March, private sector spending was expected to be
resilient. The severe financial crisis had already exacted most
of its toll on the level of activity so its drag on growth was
abating. The healing in the housing market is emblematic of this
process. Now, residential construction provides an above-trend
contribution to GDP growth, home-price appreciation adds to
wealth, and some households that had been underwater on their
mortgages are lifted back into daylight.

For 2013, US GDP growth has been nudged up from 1.6% to 1.9%.

And for 2014, estimates go from 2.5% to 2.7%.

None of these are that impressive figures, of course, but as
Reinhart notes, the direction impressive than what's being seen
elsewhere.

And they come at a time of a sequester, and a significant
shrinkage in the size of the Federal deficit, meaning that the US
is overcoming consolidation nicely, which is another surprising
fact that should make the rest of the world envious.